Best Mutual Fund Options For Beginners: A Quick Guide (2024)

No matter what stage of your investment journey you’re in, mutual funds always seem to be a more cordial option.

The option of diversification, steady returns, and timely investments is almost a dream come true for everybody trying to enter the world of investments.

However, in case you’re just getting started, it’s important to understand the ins and outs of mutual funds and what kinds of investments would be right for you.

And that’s what this blog post is about.

Let’s get started.

Mutual funds don’t need an explanation.

Yet we advise you to still be aware before you invest anywhere.

A mutual fund acts as an investment vehicle where investors pool money to purchase a diversified portfolio of securities.

This includes stocks, bonds, or other assets.

Professional fund managers manage these funds, aiming to generate returns for investors.

Every type of investment has its own unique set of advantages.

Here are a few key benefits of investing in mutual funds:

An important benefit of having a mutual fund portfolio is that you can use it to borrow a loan against it.

Yup, a loan against your mutual funds.

That’s what we at 50Fin offer too.

You can pledge your mutual funds portfolio to borrow a loan against it and unlock funds instantly.

Moreover, this allows you to get access to cash instantly without having to liquidate your portfolio.

Mutual fund investments are usually a vehicle to keep earning steady returns in the long run.

Depending on the type of investment, you can use your mutual funds to lay down long-term and short-term goals.

Most importantly, this also allows you to plan for events like buying a car, borrowing a home loan with mutual funds, or even retirement.

Investing in mutual funds is equally straightforward and convenient.

Investors can also quickly purchase shares through financial advisors, brokers, or online platforms.

The provision of features like systematic investment plans (SIPs) and automatic reinvestment of dividends allows you to make timely payments toward your portfolio.

The value keeps on accumulating to help you put together a very solidified portfolio.

Unlike a few digital financing options, mutual funds are regulated by government agencies.

These agencies include the Securities and Exchange Board of India (SEBI).

This regulatory oversight ensures that mutual funds operate within legal guidelines, providing an added layer of protection for investors.

Mutual funds are required to provide regular updates on their performance, holdings, and expenses.

This transparency also allows investors to track how their investments are performing and understand the costs associated with their investments.

1. Equity Funds: Equity mutual funds invest primarily in stocks and aim for high growth. They are suitable for investors with a higher risk appetite and a longer investment horizon. You can also borrow a loan on your equity mutual funds.

Recommended: Types of Mutual Funds

2. Debt Funds: These invest in fixed-income securities like bonds and treasury bills. They are generally considered lower risk than equity funds and are suitable for conservative investors seeking stable returns.

3. Hybrid Funds: These funds invest in a mix of equities and debt, balancing risk and reward. They are ideal for investors looking for moderate risk and balanced returns.

4. Index Funds: These funds aim to replicate the performance of a specific index, such as the Nifty 50 or Sensex. They are passively managed and usually have lower fees.

Type: Equity Fund

Features: Axis Bluechip Fund invests in large-cap companies with a track record of stability and growth. It’s a relatively safer equity fund for beginners due to its focus on established companies.

Performance: Consistently among the top performers in the large-cap category.

Type: Hybrid Fund

Features: This fund balances risk by investing in both equities and debt. It adjusts the equity-debt allocation dynamically based on market conditions, making it suitable for beginners who want balanced exposure.

Performance: Known for delivering steady returns with moderate risk.

Type: ELSS Fund

Features: Offers tax benefits under Section 80C. It invests in a diversified portfolio of stocks and has a three-year lock-in period, encouraging long-term investing.

Performance: One of the top-performing ELSS funds over the past few years.

Type: Debt Fund

Features: Ideal for conservative investors looking for short-term investment options. It invests in short-term debt securities, providing stability and moderate returns.

Performance: Consistent performance with low risk.

The Indian markets are a great place to start your mutual fund investment journey.

By understanding the different types of mutual funds, considering your investment goals and risk tolerance, and choosing the right funds, you can build a diversified portfolio that meets your needs.

Moreover, with the ability to borrow loans against mutual funds, it’s always a great option to start investing in mutual funds.

And the best place to borrow your mutual fund loan is at 50Fin.